Shareholders of Hyundai Merchant Marine, the nation’s No. 2 shipping firm, approved a controversial plan Friday to increase the limit of preferred shares it can issue, despite opposition from the second-largest shareholder, Hyundai Heavy Industries.

The approval means that Hyundai Group, HMM’s largest shareholder, is expected to tighten its control over the shipping company in financial trouble, as it will be able to sell the preferred shares to a third party to secure funds, industry analysts said.

Under the revised article passed through the meeting, HMM, the de facto holding company of Hyundai Group led by chairwoman Hyun Jeong-eun, will be able to triple the number of preferred shares to 60 million. Its board will also have more power to allot new shares to the third party.

The outlook for victory for HMM in a vote for the amendment in the shareholders’ meeting had been grim as Hyundai Heavy Industries expressed its opposition to the plan, claiming that the allotments of preferred shares to a third party would be centrary to the interest of existing shareholders. Hyundai Heavy Industries and its affiliate Hyundai Samho Heavy Industries currently hold a 22 percent stake in HMM. The two companies are not affiliates of Hyundai Group.

HMM’s top management fired back against Hyundai Heavy Industries, saying the amendments were intended to inject funds into the financially struggling shipper, hit hard by the protracted global economic slump. Further, they blamed the firm’s second-largest shareholder for its continued ambition to take over controlling right of HMM and thus Hyundai Group.

HMM and Hyundai Heavy previously clashed over control of the company in 2011.

‘’HMM’s request to shareholders is not convincing as we believe that HMM can secure more funds with the common stocks available to them,’’ Hyundai Heavy Industries said in a statement.

One notable difference in the current dispute between the two companies compared to 2011 is HMM’s deteriorating business performance.

The firm’s net loss widened to nearly 1 trillion won ($900 million) last year due to falling shipping rates and currency losses. Three local credit rating agencies downgraded HMM’s credit rate by one notch to A- last month, which means HMM must face a bigger interest burden when it borrows money.

Market watchers said the amount of debt payment would increase further this year. The debt that HMM has to repay to creditors is expected to reach 200 billion won ($180 million) in May and 280 billion won ($250 million) in October this year.

“HMM seems to be seeking a way to improve the worsening liquidity and to strengthen controlling right of the group. The failure of HMM would take a toll on the entire Hyundai Group,” a local stock analyst said.

By Seo Jee-yeon  (jyseo@heraldcorp.com)